Beware of Oil Companies Bearing Gifts

By Lee Wasserman and David Kaiser

Mr. Wasserman is the director and Mr. Kaiser is the president of the Rockefeller Family Fund.

July 25, 2018

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CreditCreditMark Pernice

Beware of oil companies bearing gifts. Recently, the lobbyists and former Senators Trent Lott and John Breaux, backed by companies like Exxon Mobil and Shell, have been campaigning for a federal tax on carbon dioxide emissions. This would increase energy costs, but all revenue from the tax would be returned to the public. A family of four might receive a $2,000 check from the government every year. And we would all have an incentive to reduce our use of carbon-based fossil fuels in favor of clean energy.

Most environmentalists, including us, desperately want a meaningful tax on carbon. But several of the people involved in this proposal have shown little previous interest in climate change. The oil industry had few better friends than Mr. Lott, a Republican from Mississippi, and Mr. Breaux, a Democrat from Louisiana, when they were in office. So what is going on here?

Well, Mr. Lott and Mr. Breaux aren’t simply proposing a tax, but a deal: a carbon tax in exchange for two other things. First, they want “an outright repeal of the Clean Power Plan,” which allows the Environmental Protection Agency to regulate carbon emissions and which the Trump administration is moving to cancel. Second — and most consequentially — they want to give fossil fuel companies immunity from lawsuits seeking to hold them accountable for damage they have done to the climate. As their proposal puts it, “Robust carbon taxes would also make possible an end to federal and state tort liability for emitters.”

Not coincidentally at all, 14 local and county governments and the State of Rhode Island filed such lawsuits in the last year, trying to make big oil companies pay their fair share for climate adaptations — the fortifications against the consequences, for instance, of rising seas, extreme weather and prolonged droughts. (The Rockefeller Family Fund has funded organizations that support the goals of these lawsuits.) Making the polluter pay is a bedrock environmental principle and a matter of simple justice. If the companies most responsible for climate change can escape liability, then ordinary citizens will have to shoulder the burden of adapting to the changing climate, which over the next few decades will cost this country trillions of dollars.

What Big Oil really fears, much more than a modest price on carbon, and what it is trying to escape through the proposed deal, is having to pay for its own actions. Climate science has made major advancements recently and can now demonstrate quite precisely the extent to which human-caused climate change is responsible for extreme weather. Peer-reviewed science can also show what percentage of greenhouse gas pollution any particular company has emitted since the Industrial Revolution.

Moreover, fossil fuel companies have known for decades what their products have been doing to the climate. Internal Exxon memos from the 1980s, for example, warned that continued fossil fuel use could inflict “catastrophic” harm on much of the world’s population. A planning exercise conducted by Shell scientists in 1998 imagined a hurricane bearing an eerily prescient resemblance to Superstorm Sandy hitting the East Coast, after which a coalition of environmental organizations “brings a class-action suit against the U.S. government and fossil fuel companies on the grounds of neglecting what scientists (including their own) have been saying for years: that something must be done.”

But rather than changing their business models, or even issuing a warning, many of these companies participated in an extensive campaign that misled the public about this coming crisis.

How concerned is Big Oil now? Chevron stated in recent filings with the Securities and Exchange Commission that climate litigation risks could have a “material adverse effect on the company,” “curtail profitability” and even make its business model “economically infeasible.”

Supporters of the Lott-Breaux plan suggest that the climate lawsuits have already served their purpose, simply by forcing their deal onto the table. They assume that the proposed tax of $40 per ton of carbon would be enough to vastly, rapidly curtail society’s use of fossil fuels — which we must do to avoid catastrophe. But companies like Exxon would not back this deal if they thought it seriously threatened them. Indeed, at about the same time that it was endorsing the proposal, Exxon was saying that it plans to pump 25 percent more oil in 2025 than it does today.

Two federal judges this summer dismissed lawsuits brought by New York City and San Francisco, but for reasons that seem questionable. Their decisions will be appealed and are unlikely to threaten the lawsuits’ ultimate success. It has generally been the courts in this country, not Congress, that have finally held outsize, socially destructive corporate interests accountable. Certainly, it would be new for courts to hold corporations liable for climate damages, and it would depend on judges’ willingness to apply recent peer-reviewed science to the facts. But the notion that a company should pay for damages it knowingly causes to another’s property is deeply rooted in our common law.

There is no necessary connection between a carbon tax and a waiver of liability for fossil fuel companies. The purpose of the Lott-Breaux plan is not to slow climate change, but to protect polluters.

Lee Wasserman is the director and David Kaiser is the president of the Rockefeller Family Fund.